SunPower's Rose: How Important Is High Efficiency in PV?

By Eric Wesoff

SunPower's (SPWRA) Doug Rose, the senior director of technology strategy, presented at the Silicon Valley PV Society last week in a talk titled, "Technology and Economics of High Efficiency c-Si PV." Of course, the thrust of the talk was the strength of SunPower's high-efficiency solar cells and panels, and the impact of efficiency on the cost and payback of a solar system.

The high efficiency of SunPower's solar cell stems in most part from its back-contact technology – a technology pioneered by founder Dick Swanson in the early 1980s at Stanford with low-cost manufacturing breakthroughs in 2001. The back contact design avoids gridlines on the front of the cell so there's no metal obscuring the cell and therefore more light gets converted to power. According to Rose, other design advantages are gained from the back-contact architecture – it allows better optimization of the front surface through texturing, an optimized backside mirror, localized contacts, and obviously backside gridlines.

The all back-contact cells allow SunPower to get to median production efficiency of 22 percent at the cell level. And while they're at it – cell thicknesses in the 150 micron range at about 6 grams of silicon per watt.

Rose raised the question: "How can high efficiency cells be cost effective? You're not using the same platform as everyone else." The response was: "Sunpower spends a little more in cell processing to deliver savings across the value chain."

That's the value proposition of high efficiency cells. The cells are more expensive but cost savings are realized all down the line.

So how much exactly is this "efficiency bonus?"

According to research performed by crack Greentech Research analyst Shyam Mehta – gains in efficiency drive cost reductions at all steps of manufacturing on a $/W basis, from feedstock cost to module conversion – a 1 percent improvement in efficiency leads to a 5 percent to 7 percent decrease in fully loaded module cost. (Shyam's most recent report is on PV Manufacturing in the US and can be found here). His efficiency thesis is charted below:

click to enlarge

In a solar market where prices are plunging, margins are crumbling and market consolidation is on the horizon – how much of a premium can SunPower command for its high-end product? A banker friend believes the dollar per watt premium is only 10 percent to 20 percent over conventional silicon or thin film PV. With SunPower at a less than $2 per Watt module price in the fourth quarter of 2009 and some c-Si vendors below $1.50 per Watt – can SunPower command a 35 percent premium?

SunPower believes it can. My banker friend says no.

Here are some of the benefits of higher efficiency:

• Lower area-related costs
• Reduced installation costs
• Reduced shipping costs
• Reduced Balance of Plant (BOP) costs
• Optimized for area constrained roofs or sites
• SunPower's product has a better temperature coefficient, tighter distribution and better low-light performance

All factors resulting in a lower LCOE.

A Very Few Words on LCOE

A simplified formula for Levelized Cost of Energy (LCOE) is:

LCOE = Panel cost + BoP cost + O&M costs / Sunlight collection * Conversion efficiency

But, unfortunately it's not really that simple. SunPower has detailed calculations and displayed the many factors influencing LCOE in its presentation. NREL has its own byzantine formula for LCOE.

An accurate measure of LCOE will have to include:

• Initial investment
• Depreciation tax
• Annual costs
• System residual value
• System energy production

And LCOE calculations have a very high sensitivity to certain input variables such as:

• Annual panel degradation
• Differences in annual discount rate / cost of capital
• System life (inverter replacement, etc.)
• Annual O&M

The major contributors to LCOE are:

• Capital costs
• Modiule $/W
• Area related BPS
• Electrical BPS
• Project related costs

"If someone says the LCOE of my technology is x cents per kilowatt-hour, it still doesn't tell you a lot," said Rose.

Differentiation and Branding in a Commodifying Market

A healthy cost structure, a good balance sheet, and the right level of vertical integration are what will distinguish winners from losers in the coming solar shakeout. Differentiation is going to help as well. And SunPower has that technical differentiation by virtue of the highest efficiency commercial solar product – a 22 percent median efficiency in 2006 looking for over 23 percent in its Gen3 cells. Combined with itss one-axis trackers which increase capacity factor by about 30 percent to match energy production with summer load, an important point for utilities – SunPower has some of the crucial ingredients for survival in the demand-constrained solar landscape.

Of further interest in the differentiation department is SunPower's recent plunge into consumer branding of its panels. Ride a bus in San Francsisco and you'll see a SunPower-branding consumer ad campaign.

Three questions for our readers:

• Do consumers care which brand of solar panel they're buying?
• What is the real value, the real premium for high efficiency?
• And contrarily – what is the penalty for low efficiency? Where does 6 percent to 8 percent efficient a-Si or OSC fit into the solar landscape? Or does it?

We welcome your thoughts.

Comments

[Zenfar:]

Do consumers care which brand of solar panel they're buying?

The a lot early adopters will. As far as efficiency, people are going to want to be able to power their whole house from the panels on the roof, maybe even just half the roof.

Sep 14 01:26 PM

[Abe Mishima:]

I see several market tiers in my state (Hawaii). Consumers with money opt for Sunpower, sold here locally through Suntech, no relation to STP. SPWR is a US company, and many Hawaii residents are patriotic, buying the best the US has to offer. Home builders, on the other hand, may use modules sourced from China. The lower end the house is, the more likely the builders are to buy the cheapest part available. This is not good for Sunpower, although some builders do pay more to install Sunpower, banking on brand name recognition. Next, the utilities (namely Hawaiian Electric), should be a big buyer of panels in the next decade. Their decision process is secret, but life cycle costs will figure into their negotiations with suppliers. SPWR is best positioned from that perspective. (Note: many government installations only buy from a US manufacturer, for precisely that reason, and security). Last but not least is the end retail market, which will include Home Depot, Lowes, and Costco. This is the wild card, because a homeowner who can do it yourself, can make a vast difference in the marketplace. In every business, there are very few best of breed. Honda is the best (imho) for garden power equipment. People pay more for a Honda. Although dozens of manufacturers make lawn mowers, it is not a commodity product. Sunpower has to position itself as the best in its field, to distinguish itself from those who would commoditize the solar module field.

Sep 14 01:57 PM

[cynnatalie2000:]

Sunpower deserves a premium. IMHO, that premium is 40% as compared to thin film in the value per watt, but somewhat less as opposed to other polysilicon based panels.

A 2 dollar per watt price for SPWR equates to $1.20 for FSLR.

Sep 14 08:18 PM

[Robert Cast...:]

Why are so many of these solar articles from Greentech in the Chip section of Seeking Alpha? Yes many of the are a semiconductor (silicon) with a p-n junction, but they don't function as a chip, which one would think of as a microprocessor from Intel or DRAM from Micron. Of course the solar inverters, which contain IGBTS or MOSFETS should qualify. If Greentech considers itself a solar specialist, they should also know they are NOT chips.

Sep 15 08:52 AM

[David Lentz:]

The fraction of how much of their electrical consumption homeowners who install PV systems will want to provide is largely dictated by their goals (getting off the grid vs lowering costs and exposure to future electricity rate hikes) and their electric utility's policies in supporting customer-generated electricity.

In many areas supplied by Duke Energy, they adopt the policy of welcoming customer-generated electricity -- so long as it does not exceed the amount the consumer is purchasing. It will "bank" excess electricity credits, but will never, ever send out a check to the consumer to pay for the excess electricity generated, at any rate of compensation. All that the PV customer is permitted to do is reduce, but not exceed their own electricity consumption. Duke regards itself primarily as a supplier of electricity, and not at all as a broker of electricity. Their customers have no incentive whatsoever to invest in sufficient capacity to generate more electricity than they use. Such policies have the effect of scaling back homeowner investments to the level of supporting electric vehicle recharging, or reduction of the electricity draw during peak load periods.

OTOH, if a homeowner's goal is to get completely off the grid, using it either not at all or only as a backup after whatever energy storage facilities they invest in are depleted, then the profile of how much they are willing to invest in a PV system changes a lot. But I suspect that most will fall into the supplementary power only category, at least until regulatory agencies force the utilities to accept roles as electricity brokers and not just electricity producers.

Sep 15 12:47 PM

[experienced:]

It would be quite unusual if a roof solar PV installation could supply all the power needed in a typical residential household -- especially during mid-day with an air conditioner. So the higher efficiency of SunPower units would ordinarily not supply enough power to alllow a utility company like Duke Power to send a check to the homeowner. On the other hand, what if the homeowner is away on business or vacation? Then it's likely the solar unit will provide more electricity than needed. A utility company could easily provide credits for excess power in individual units. This is far from being a power broker. It's more like doing good business.

Sep 15 01:04 PM

[jerrydd:]

Like the banker said, only a 10-20% premium for high eff. And on homes this is even less as there isn't a restraint on roof area as any eff home only needs 1/4 of it's roof area covered in lower eff cells.

In Fla and many other states you get a check at the end of the yr for electricity if you make more than you use. Hopefully this will be a federal law soon.

Solar happens mostly during peak power needs, especially in Cal, southern states so is a boon to utilities as peak power is worth 3-10x's off peak power. Since they are only paying regular rates for it they are making out like bandits!!

Sep 15 02:57 PM

[RayMart:]

It's all about available roof space. I just got a quote from a solar installer who provided two quotes. One from SunPower and one from a thin film technology company. The SunPower system can fit on my existing back roof out of site. The thin film technology company needed to install a huge frame in my backyard to support the number of panels needed to supply the same energy as produced by the more efficient SunPower system. This same theory applies to Walmart, HP and other stores with limited roof space. In each case, SunPower comes out the real winner.

Sep 15 03:17 PM

[Jigar Shah:]

SunPower's prices are still around $2.80/Wdc while CSI is at $1.80/Wdc this month. CSI can get to $1.50/Wdc by mid-2010, SPWR maybe $2/Wdc by the end of the 2010. The thing that we shoudl keep in mind is that as CSI, Suniva, Suntech Pluto and others head towards $1.50/Wdc their efficiency is headed towards 17%-20% cell efficiency. SPWR is not moving up as fast and their costs are not coming down as fast.

Sep 15 04:59 PM

[Road Runner:]

Some info for calculations.

I just read some comments from the CEO of Akeena, the big solar installer. He said that panels are 1/3 the cost of a home solar system, and installation labor was 1/3 or more of the cost. I assume the remaining 1/3 is inverters, wiring, fasteners, etc.

Sep 15 10:48 PM

[Road Runner:]

Referring to my previous comment.

Since at least 1/3 the cost of a home solar system is labor, and that percentage is likely to increase as panel and other component prices drop, it seems that self installation kits will start to emerge. Maybe there are already such things.

I don't understand why installing a solar system would be that difficult. I've owned 2 homes and I've done many significant improvements to both homes. There are many handy men like me around. It would be a very satisfying challenge to see if I could do this myself. I could beat my chest and brag to everyone after I finished – ok, I’ll calm down.

In the kit would be instructions where 2 men and a boy (the runner) could install it. Maybe neighborhoods would group together, buy all the components at a volume discount, and work out a plan for sharing the installation work. It could be a barter system.

Sunpower has been working hard to make installation easier. I could see Sunpower starting to promote "do it yourself" kits. Maybe a "do it yourself" solar car port. This way a homeowner who is a little nervous about “tinkering” with his roof (oops I just caused the roof to start leaking) could take advantage of home solar while providing shade for an additional car. I could see these being popular on driveways in the southwestern US. I can visualize them on driveways in Phoenix.

A Sunpower solar car port kit could even have an option for a single axis sun tracking feature that would go from, say, 30 degrees one way to 30 degrees the other way. Talk about having something unusual to show off to neighbors and friends – hey its boring in suburbia. But maybe I’m pushing the limits of reasonable design with this.

Sep 15 11:19 PM

[paul:]

I see very little mention of the "loading" box for panels. This box of electronics can dramatically increase the efficiency of panels by presenting a load that keeps the panels looking into a 17v. load. If you load the panels incorrectly, their efficiency drops dramatically. Intelligent electronic design has a large impact on the efficiency of the panels.

Sep 16 05:54 PM

[Jade Queen:]

SolarWorld may be interested in producing DIY also. I don't own SolarWorld, but I try to keep up with what they are doing. I do own STP and SPWRA. I am looking to ratepayer-owned utilities to lead with reasonable payments for feeding in. I had hoped some investor-owneds would be interested in the distributed-energy resiliency potential from leading with feed-in, but I guess that was a silly hope. Only a few companies are close enough to customers to think that long-term.

Sep 18 11:47 AM